Home assessment value vs. market value: what's the difference and why it matters

Last updated 2026-07-09

What is assessed value and how is it different from market value?

Market value is the price a willing buyer would pay a willing seller in an arm's-length deal, with neither side under pressure to act. It's what Zillow guesses, what your agent prices, and what a buyer's offer reflects. It moves every day with interest rates, neighborhood demand, and comparable sales.

Assessed value is a different animal. It's a number your county assessor calculates for one purpose: dividing up the local tax burden. It may track market value closely or drift far from it, depending entirely on state law and local practice. Many states tell assessors to value property at 100% of market value in theory, then apply a legal assessment ratio below 100% to reach the taxable figure. Other states skip the ratio and assess at a set percentage of market value by statute.

The difference hits your wallet. Say your home would sell for $450,000 on the open market but your county assesses at 80% of market value. Your assessed value is $360,000, and the tax rate applies to that figure, not the sale price. In a state that assesses at 100%, those two numbers should match. They often don't, because assessment cycles lag behind actual sales.

A third number shows up on tax bills too: taxable value. Taxable value is assessed value minus any exemptions you qualify for, like a homestead exemption, senior freeze, or veterans exemption. That's the final figure your mill rate multiplies. Mixing up these three numbers is the single most common mistake homeowners make when they try to understand or fight their tax bill. ^[1]

What is the assessment ratio and how does it work?

The assessment ratio (sometimes called the level of assessment) is the percentage of market value at which a jurisdiction officially assesses property. State law or local ordinance sets it, and it varies a lot from one place to the next.

State / Jurisdiction	Legal assessment ratio	Notes
California	~25% of current market value (in practice)	Prop 13 caps increases at 2%/yr; assessed value often far below market [2]
New York (most localities)	Varies by municipality, often under 100%	NYC uses 6% for Class 1 (1-3 family homes) [3]
Illinois	33.33% of market value (Cook County Class 2 residential)	Set by Illinois Property Tax Code 35 ILCS 200/9-145 [4]
Texas	100% of market value	No state income tax; assessed value should equal appraised market value [5]
Florida	100% of just value, then Save Our Homes cap applies	Homestead assessed value can't rise more than 3%/yr or CPI, whichever is less [6]
Massachusetts	100% of full and fair cash value	Assessed value must be within 10% of market by state standard [7]

The ratio is why comparing tax bills across state lines is almost meaningless until you convert everything to an effective tax rate (annual tax divided by market value). A county with a 3% nominal mill rate applied to 33% of market value carries the same effective burden as a county with a 1% nominal rate applied to 100% of market value. Same pain, different arithmetic.

When the actual ratio in your county drifts away from the legal ratio, that's where assessment inequality creeps in. Studies of large urban counties keep finding the same thing: lower-value homes get assessed at a higher percentage of their real market value than higher-value homes. The University of Chicago Harris School's 2021 analysis of assessment regressivity documented this pattern across the counties it studied. ^[8]

Why is my assessed value lower than my market value?

Several ordinary reasons explain a low assessment, and most of them mean nothing is wrong.

First, your state may have a statutory ratio below 100%. In Cook County, Illinois, residential property is legally assessed at 10% of market value, and the assessor then applies a state equalization factor to reach the 33.33% level. That gap is by design, not by error. ^[4]

Second, reassessment doesn't happen every year everywhere. Plenty of counties reassess every two, three, or four years. If your market has jumped between cycles, your assessed value trails your current market value. That works in your favor as a taxpayer, right up until the next reassessment catches up.

Third, some states cap annual increases in assessed value no matter what the market does. California's Proposition 13 is the famous one: assessed value rises no more than 2% per year until the property sells. ^[2] Florida's Save Our Homes amendment works the same way. A longtime California owner might carry a market value of $1.2 million and an assessed value of $280,000 simply because they bought 30 years ago.

None of these situations point to a mistake. Worry starts when your assessed value climbs above what comparable homes actually sold for, because then you're paying tax on phantom value that no buyer would touch.

Can my assessed value be higher than my market value?

Yes. This is the scenario that quietly drains money from homeowners every year.

Assessors work from mass appraisal models that value thousands of properties at once, using prior sales, square footage, age, and neighborhood. They don't walk through your home. They have no idea about the cracked foundation, the 1980s kitchen, the highway noise out back, or the fact that your neighbor just sold for $40,000 less than your assessment implies.

When the model overshoots your property relative to real market conditions, your assessed value lands above what your home would actually sell for. You're being taxed on value that doesn't exist. That's the strongest possible basis for an appeal.

The test is simple. Pull three to five recent sales of genuinely comparable homes in your neighborhood (same general size, age, condition, lot type), and compare their sale prices to your assessed value. If your assessed value beats those sale prices, or beats what a licensed appraiser would estimate for your home, you likely have a winnable case.

Data on how often this happens is patchy across jurisdictions, and the picture isn't reassuring. A 2021 ProPublica and Indiana University analysis found assessment errors of 10% or more in a meaningful share of properties in the counties they examined. ^[12] Nobody has clean national numbers on this. Local appeals boards do report reductions granted in a large share of cases heard on the merits, according to various county assessor annual reports. If you want a structured way to gather and organize your comparable sales, a DIY tool like the TaxFightBack appeal kit walks you through the process without handing a percentage of your savings to a contingency firm.

How does assessment value affect your property tax bill?

Your property tax bill almost always comes from one formula:

Tax bill = (Assessed value minus exemptions) x mill rate

The mill rate (or tax rate, or levy rate) gets set by your local taxing authorities: the county, the school district, the city, and any special districts. One mill equals $1 of tax per $1,000 of taxable value. A mill rate of 20 applied to a taxable value of $300,000 produces a $6,000 annual bill.

So a $10,000 cut in your assessed value cuts your bill by $10,000 times your mill rate. At 20 mills, that's $200 a year, every year, until the next reassessment. Small reductions stack up.

The mill rate itself is almost never worth appealing. Elected bodies set it through a public budget process, and you can't argue it down at a hearing. What you can appeal is the assessed value, specifically whether it reflects the market value of your property (or the legal assessment ratio applied to that market value). That's the one lever homeowners actually control. ^[1]

For how this shakes out in specific counties, see our breakdowns for Bexar County property taxes in Texas, where 100% appraisal-to-market value is required, and Philadelphia property tax, where the city uses a 100% ratio but has a long record of wide valuation gaps across neighborhoods.

How do assessors actually calculate your assessed value?

Most residential assessments use one of three approaches, and which one applies to your property shapes how you build an appeal.

The sales comparison approach (also called the market approach) estimates value from recent sales of comparable properties. It's the standard for single-family homes and condos, and it's the same approach you'll use when you gather your own comps for an appeal.

The income approach estimates value from the rental income a property could generate, capitalized at a market rate. It's the standard for commercial and rental properties, though some assessors apply it to multifamily residential.

The cost approach estimates what it would cost to replace the structure today, minus depreciation, plus land value. Assessors use it for newer construction, special-use properties, and cases where comparable sales just don't exist.

For most homeowners, the sales comparison approach is what the assessor used and what you should analyze. The model picks characteristics like square footage, bedroom count, bath count, garage, lot size, and age, then applies estimated values per unit. The error usually hides in what the model misses: your property's specific defects, its condition relative to the block, the micro-differences within a neighborhood. That's the gap you document to win. ^[9]

You can often see which comparable sales the assessor used by requesting the property record card from your county assessor's office. It's almost always a public record. Look up your property tax records to find the right place to request it.

What's a good way to compare your assessed value to your market value?

The cleanest, most defensible method is a sales ratio analysis. Take your home's assessed value, divide it by the actual sale price of a comparable property, and see where your ratio lands against the legal assessment ratio in your state.

Work an example. Your home is assessed at $400,000 in a state where the legal ratio is 100%. Three comparable homes in your neighborhood sold in the last six months for $340,000, $355,000, and $362,000. Your assessment implies a market value of $400,000. The actual market says $352,000 on average. You're over-assessed by roughly $48,000, and you have three closed sales to prove it.

Free tools to find comparable sales include:

• Your county assessor's public search portal (almost every county has one now; use our property tax lookup guide to find yours)
• Zillow, Redfin, and Realtor.com for recent sold prices
• Your county clerk or recorder's public deed records
• The MLS, if you have access through a real estate agent

A paid independent appraisal ($300 to $600 in most markets) is the gold standard for evidence. It carries the most weight at a formal hearing, especially when the gap between your assessed value and market value is big enough to justify the cost. A $600 appraisal that knocks $80,000 off your assessment in a 20-mill county saves you $1,600 a year, indefinitely. The math usually works.

For county-specific guidance on how local assessors compare your value to sales, see our pages on Montgomery County property tax, Loudoun County property tax, and Clark County property tax, three jurisdictions with meaningfully different assessment practices.

When should you appeal your property assessment?

Appeal when your assessed value, adjusted for the legal assessment ratio, implies a market value higher than what comparable properties actually sold for. That's the short version.

Get more specific and consider appealing if:

Your assessed value beats recent comparable sale prices by more than 5 to 10 percent. Below that, normal valuation variation makes a win less certain and the effort may not pay off.

Your assessment jumped in a single cycle and you have evidence that market values in your area didn't rise the same way.

You know about specific physical defects (deferred maintenance, unpermitted work, structural issues) that a mass appraisal model would never catch.

Your assessed value runs higher relative to market value than neighboring similar properties. That's an equity argument, and many appeal boards take it seriously.

Deadlines are firm and they vary by jurisdiction. Most states give homeowners 30 to 90 days from the date the assessment notice is mailed to file. Miss the window and you generally wait until the next assessment year. California's deadline is typically November 30 or within 60 days of the assessment notice, whichever is later, under Revenue and Taxation Code Section 1603. ^[2] Texas requires protests by May 15 or 30 days after the notice of appraised value, whichever is later, under Tax Code Section 41.44. ^[5] Check your county's notice for the exact date. ^[10]

DeKalb County, Georgia homeowners can find local process detail on our DeKalb County tax assessor page, including appeal timelines and office contact information.

Does a high assessment mean your home is worth more than you think?

Not necessarily, and this misconception costs people money in both directions.

Assessed value is a government estimate from a mass appraisal model. It's not an appraisal, it's not a market analysis, and it's not what a buyer will pay. Assessors openly admit their models carry error. The International Association of Assessing Officers (IAAO) sets a professional standard that the coefficient of dispersion (a measure of assessment uniformity) should sit at 15% or less for residential properties in typical markets. ^[9] Put plainly: a 15% spread is considered acceptable professional practice. Your assessment could be 15% high and still fall inside IAAO standards.

Pricing your home for sale? Don't lean on the assessed value. Get a comparative market analysis from a local agent or a formal appraisal. Trying to understand your tax bill? Assessed value is the number that matters. Two different problems, two different tools.

There's one place a surprise-high assessment carries indirect market information. If your assessor uses very recent sales and your number jumped sharply, it may signal that comparable homes in your area have appreciated. Even then, check it against actual closed sales before you draw any conclusion.

How do property tax assessment practices vary by state?

Few areas of local taxation vary as wildly as assessment. It changes state by state, and sometimes county by county inside a single state. There's no federal standard at all.

A few patterns are worth knowing.

Annual reassessment states (Texas, California on a post-sale trigger, most of New England) tend to keep assessed values closer to market value, though caps and exemptions create exceptions.

Infrequent reassessment jurisdictions (many Midwestern and Southern counties reassess every three to eight years) often carry large gaps between assessed and market value for homes that haven't sold recently.

Classification states (Illinois, Minnesota, New York City) apply different assessment ratios to different property classes: residential versus commercial versus agricultural. ^[12] This changes how you compare your assessment to a neighbor's.

Acquisition-value states (California under Prop 13, Michigan under Proposal A) base assessed value on purchase price plus a capped annual increase, so two identical neighbors can carry wildly different assessed values based purely on when they bought. ^[11]

Knowing your state's system tells you whether a gap between assessed and market value is normal, a policy feature, or a real error worth fighting. For county-level detail, our pages on Denton County property tax (Texas, annual appraisal district model) and OC property tax (California, Prop 13 acquisition value) show how far apart these systems sit in practice.

What's the difference between appraised value and assessed value?

These two terms cause endless confusion, because in some states (Texas being the loud example) the official government estimate is called the appraised value, which is then legally distinct from the assessed value after exemptions.

In Texas, the appraisal district sets an appraised value that should equal market value under Tax Code Section 23.01. The assessed value is then the lesser of that appraised value or a 10% annual cap on increases for homestead properties, under Tax Code Section 23.23. ^[5] So in Texas: appraised value equals the market value estimate, assessed value equals the potentially capped lower figure, and taxable value equals assessed value minus exemptions.

In most other states, appraisal and assessment get used more loosely, and the official assessed value is simply the tax-base figure after the state ratio is applied.

When you hire a private appraiser to support an appeal, their report gives you an independent estimate of market value. That market value becomes the evidence you use to argue your assessed value sits too high relative to the legal ratio. The private appraisal and the government assessment are two different things, produced by different people for different reasons, but the private appraisal is often the strongest evidence you can carry into a hearing.

Frequently asked questions

Is assessed value always lower than market value?

No, though it often is, thanks to assessment ratios below 100% and lagging reassessment cycles. Assessed value can exceed market value when the model overestimates your property, when market values have dropped since the last assessment, or when your home has defects the model didn't capture. When assessed value implies a market value above what comparable homes actually sold for, you likely have grounds to appeal.

How do I find my home's assessed value?

Your assessed value appears on your annual property tax notice or assessment notice. You can also look it up anytime on your county assessor's public search portal, usually searchable by address, owner name, or parcel number. Most county portals are free and need no login. Our property tax lookup guide links directly to hundreds of county search tools if you're not sure where to start.

What percentage of market value is assessed value?

It depends on your state. Assessment ratios run from roughly 10% to 100% of market value. California under Prop 13 often produces effective ratios well below 25% for long-held homes. Illinois Cook County residential is legally 10% before equalization. Texas and Massachusetts target 100%. Check your state's Department of Revenue or Department of Taxation website for the official legal ratio, then verify the actual ratio in your county.

Does a higher assessed value mean I owe more taxes?

Yes, directly. Your tax bill equals your taxable value (assessed value minus exemptions) times the mill rate. A higher assessed value means a higher taxable value and a higher bill, assuming the same mill rate and exemptions. Every $10,000 increase in assessed value raises your annual bill by $10,000 times your mill rate. At 20 mills, a common rate in many suburban counties, that's $200 a year.

Can I appeal my property assessment if it's lower than market value?

You can file an appeal, but no sane homeowner does. You'd be asking the assessor to raise your taxes. The rare exception is a neighbor who thinks their assessment runs higher relative to market value than yours and raises it as an equity argument. As a homeowner, you only benefit from an appeal when your assessed value (adjusted for the legal ratio) overstates your market value.

How often are property assessments updated?

It varies a lot by state and county. Texas appraisal districts reassess annually. California reassesses only when a property sells or gets newly constructed, with 2% annual cap increases in between. Many Midwestern and Southern counties reassess every two to four years. Some older jurisdictions go longer. Your assessment notice usually states the effective valuation date. That lag between cycles is why assessed values so often trail market values in rising markets.

What is equalized assessed value (EAV)?

Equalized assessed value is the assessed value after a state equalization factor (also called a multiplier) is applied to bring assessments across counties to a uniform level of market value. Illinois uses this system: Cook County assesses residential at 10%, then the Illinois Department of Revenue applies a multiplier to push the EAV closer to 33.33% of market value. Your tax bill starts from the EAV, not the raw assessed value.

Does selling my home reset my assessed value?

In acquisition-value states like California and Michigan, yes. A sale triggers reappraisal and your new assessed value gets set at the purchase price. In annual-reassessment states like Texas, the sale price becomes public record and the appraisal district treats it as strong evidence of market value at the next appraisal. In most other states, a sale feeds the comparable sales database the assessor uses but doesn't automatically reset your individual assessment to the sale price.

How do I know if my home is over-assessed?

Pull three to five sales of comparable homes in your neighborhood from the last six to twelve months (same size, age, condition range, similar lot). Divide your assessed value by your state's legal assessment ratio. If that implied market value runs higher than what comparable properties actually sold for, you're likely over-assessed. A gap of more than 5 to 10 percent is generally worth pursuing through your county's formal appeal process.

Do exemptions change my assessed value or just my taxable value?

Exemptions reduce your taxable value, not your assessed value. The assessed value stays on the record as the assessor's estimate of your property's worth. The exemption amount gets subtracted from assessed value to reach taxable value, which is what the mill rate hits. Appealing your assessed value and applying for exemptions are two separate actions, and you should consider doing both if you qualify.

What evidence do I need to prove my assessment is too high?

The strongest evidence is recent arm's-length sales of genuinely comparable properties within half a mile and the last six to twelve months, showing prices below what your assessment implies for your home. A licensed appraisal is the gold standard. Photos and contractor estimates documenting physical defects supplement the sales data. Your own property record card (request it from the assessor) is essential for catching factual errors in square footage, bedroom count, or lot size.

Is tax assessment vs home value the same comparison as Zillow estimate vs assessed value?

Not exactly. Zillow's Zestimate is an automated valuation model estimate of market value, not an appraisal and not an official number. Assessed value is an official government figure used for taxation. Both try to estimate market value, but with very different inputs, accuracy, and legal standing. For appeal purposes, actual closed sale prices of comparable homes carry far more weight than any automated estimate, including Zillow's.

How long does a property tax appeal take?

Informal reviews with the assessor's office can wrap up in a few weeks. Formal appeals to a local review board typically take two to six months from filing to decision, depending on the jurisdiction's backlog. State-level appeals or those going to tax court can take one to two years. Many jurisdictions let you pay the undisputed portion of your bill while the appeal is pending, so you're not at risk of penalties during the process.

Sources

1. Lincoln Institute of Land Policy, 'A Primer on Property Tax Administration and Policy': Property tax equals taxable value (assessed value minus exemptions) multiplied by the mill rate; assessed value, taxable value, and market value are three distinct figures.
2. California State Board of Equalization, Proposition 13 overview: California's Proposition 13 caps annual increases in assessed value at 2% and triggers full reassessment to market value on sale; appeal deadline is November 30 or 60 days from notice under Revenue and Taxation Code Section 1603.
3. Illinois General Assembly, 35 ILCS 200/9-145, Property Tax Code: Illinois Property Tax Code Section 9-145 sets the legal assessment level for residential property at 33.33% of fair market value; Cook County assesses residential at 10% before the state equalization factor is applied.
4. Texas Comptroller of Public Accounts, Property Tax Code Sections 23.01, 23.23, and 41.44: Texas Tax Code Section 23.01 requires appraisal at 100% of market value; Section 41.44 sets the protest deadline at May 15 or 30 days after notice of appraised value, whichever is later; Section 23.23 caps homestead assessed value increases at 10% annually.
5. Florida Department of Revenue, Property Tax Oversight - Save Our Homes: Florida's Save Our Homes amendment limits annual increases in homestead assessed value to 3% or the CPI change, whichever is less, though just value is assessed at 100% of market value.
6. Massachusetts Department of Revenue, Division of Local Services, Property Valuation Standards: Massachusetts requires assessed value to be set at 100% of full and fair cash value, with assessments required to stay within 10% of the sales-based median ratio to keep state certification.
7. University of Chicago Harris School of Public Policy, 'The Regressivity of Property Taxation' (2021): A 2021 analysis found that lower-value homes are systematically assessed at a higher percentage of their actual market value than higher-value homes across studied counties, documenting assessment regressivity.
8. International Association of Assessing Officers (IAAO), Standard on Ratio Studies: IAAO professional standards hold that a coefficient of dispersion (assessment error measure) of 15% or less is acceptable for residential properties in typical markets; assessors use sales comparison, income, and cost approaches.
9. National Taxpayers Union Foundation, Property Tax Appeal Guide: Most states give homeowners 30 to 90 days from mailing of the assessment notice to file a formal appeal; deadlines vary by jurisdiction and missing the window forfeits the right to appeal until the next cycle.
10. Michigan Department of Treasury, Proposal A Property Tax Overview: Michigan's Proposal A, like California's Prop 13, bases assessed value on acquisition price plus a capped annual increase, creating wide divergence between assessed and market values for long-held properties.
11. Minnesota Department of Revenue, Property Tax Classification Rates: Minnesota applies different class rates to residential, commercial, and agricultural properties, making cross-class comparisons of assessed-to-market ratios misleading without adjusting for classification; assessment error studies of urban counties have documented reductions granted in a large share of appealed cases.